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The chief operating officer of FedEx blamed the personnel problems on Tuesday after reporting a 7% drop in quarterly profits and said the “tight labor market” was the biggest problem the company was facing.
Raj Subramaniam, the executive, used his Portland distribution center as an example of the challenges, according to Reuters. He said the facility was running at 65%, which means the company is spending more to send packages to other hubs for delivery. He said the company expects the problem to continue during the peak of the holidays. He said about 600,000 packages a day are rerouted.
The stock fell 4% after-hours trading after missing projections and also lowered its forecast for 2022. Barron’s reported that the company adjusted earnings per share to $ 4.37 from $ 22 billion in sales during the period. The magazine pointed out that Wall Street expected $ 4.88 in earnings per share on $ 21.9 billion in sales.
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The Wall Street Journal reported that the staff shortage added $ 450 million in costs, which included more overtime payments. The Journal also reported that the supply chain has also been a burden on the business, which includes a lack of parts and congested ports.
The newspaper said the company was looking to offset some of the expense with higher shipping prices.
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Frederick W. Smith, president and CEO of FedEx Corp., said in a statement that executing our strategies “continues to drive demand for our services, despite the disruptive impact of the pandemic on hand availability. work and global supply chains ”.
“I am very proud of our team members around the world who continue to transport life-saving vaccines and deliver emergency supplies to people affected by natural disasters like Hurricane Ida and recent earthquakes,” said he declared.
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